Correlation Between Max Healthcare and IG Petrochemicals

Can any of the company-specific risk be diversified away by investing in both Max Healthcare and IG Petrochemicals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Max Healthcare and IG Petrochemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Max Healthcare Institute and IG Petrochemicals Limited, you can compare the effects of market volatilities on Max Healthcare and IG Petrochemicals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Max Healthcare with a short position of IG Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Max Healthcare and IG Petrochemicals.

Diversification Opportunities for Max Healthcare and IG Petrochemicals

0.75

Correlation Coefficient

Max Healthcare  IG Petrochemicals

Poor diversification

The 3 months correlation between Max and IGPL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Max Healthcare Institute and IG Petrochemicals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IG Petrochemicals and Max Healthcare is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Max Healthcare Institute are associated (or correlated) with IG Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IG Petrochemicals has no effect on the direction of Max Healthcare i.e., Max Healthcare and IG Petrochemicals go up and down completely randomly.

Pair Corralation between Max Healthcare and IG Petrochemicals

Assuming the 90 days trading horizon Max Healthcare Institute is expected to generate 1.09 times more return on investment than IG Petrochemicals. However, Max Healthcare is 1.09 times more volatile than IG Petrochemicals Limited. It trades about 0.03 of its potential returns per unit of risk. IG Petrochemicals Limited is currently generating about -0.13 per unit of risk. If you would invest  113,905  in Max Healthcare Institute on December 24, 2024 and sell it today you would earn a total of  3,120  from holding Max Healthcare Institute or generate 2.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Max Healthcare Institute  vs.  IG Petrochemicals Limited

Max Healthcare Institute

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Max Healthcare Institute are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Max Healthcare is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

IG Petrochemicals

Risk-Adjusted Performance

Very Weak

Over the last 90 days IG Petrochemicals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Max Healthcare and IG Petrochemicals

The main advantage of trading using opposite Max Healthcare and IG Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Max Healthcare position performs unexpectedly, IG Petrochemicals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IG Petrochemicals will offset losses from the drop in IG Petrochemicals' long position.

The idea behind Max Healthcare Institute and IG Petrochemicals Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.